Studies were done to test the effect of cytosine methylation on the expression of a transforming gene. It was found that methylation of the MSV genome at HpaII sites significantly reduced its ability to transform NIH 3T3 cells in DNA transfection experiments, and the reduction in transforming activity after transfection of methylated DNA was reversed by the use of a specific inhibitor of methylation. A low level of transforming activity after transfection of methylated DNA was detected apparently because the methylation pattern of transfected DNA was not maintained during initial rounds of DNA replication in cells. Methylation of the structural gene (mos) was more inhibitory to expression of transformation in these assays than methylation of the promotor region (LTR). Experiments to elucidate the mechanism by which methylation effects gene expression in this system are in progress.